Senators oppose plan to curb phone taxes

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The joint board's recommendation does enjoy support from a number of phone companies, such as Verizon and AT&T, and industry groups representing companies that have traditionally provided wireline telephone service, such as the U.S. Telecom Association. They say a cap is fully justified because caps already exist for wireline carriers and because consumers shouldn't have to put up with increasing taxes on their bills.

"The funding today is not targeted toward underserved areas," Joel Lubin, an AT&T vice president, told the politicians. Instead, consumers are footing the bill for multiple wireless providers to build out services in the same neighborhoods, he added.

But smaller wireless carriers and public safety officials in rural states argue that limiting the amount of funding available to them would harm the well-being of consumers in the areas they hope to serve.

U.S. Cellular President John Rooney said his company, which provides service in 200 regional markets around the country, also opposed the cap proposal because it was "wildly unfair" to wireless companies that are committed to extending their service to rural areas.

"Today we are using that (USF) support to provide rural consumers with essential services in ways that would not otherwise be possible," he told the politicians.

CNET News.com's Declan McCullagh contributed to this report.

[ktaglang]

Only Senators Defend Taxes?

It is not really hard to find defenders of the Universal Service Fund and Ms Broache could have found them with an easy Google search. See these recently-published examples:

* A Wireless Lifeline
<a class="jive-link-external" href="http://www.washingtontimes.com/op-ed/20070611-085926-9512r.htm" target="_newWindow">http://www.washingtontimes.com/op-ed/20070611-085926-9512r.htm</a>

* FCC fund freeze could signal bad news
<a class="jive-link-external" href="http://www.pjstar.com/stories/061207/BUS_BDFQGMUV.004.php" target="_newWindow">http://www.pjstar.com/stories/061207/BUS_BDFQGMUV.004.php</a>

* Wireless funding cap can hurt rural areas
<a class="jive-link-external" href="http://www.roanoke.com/editorials/commentary/wb/120335" target="_newWindow">http://www.roanoke.com/editorials/commentary/wb/120335</a>

[declan00]

actually...

A few points:

* First, you conflate the broad Universal Service Fund with the myriad of taxes and fees that appear on our phone bills. One can hate the second while still agreeing with the principles of the first (perhaps through a different funding mechanism, such as general tax revenues).

* Second, it's easy enough to find examples of special interest pleading, such as the specific wireless company you cite that would benefit from handouts going to specific types of wireless companies. Let me say that I, for one, would welcome federal handouts going to Irish-American journalists whose last names begin with "McC-" -- but that's not that interesting a point, or a good argument for McC- handouts.

* Third, if you identify broad support for those end-of-bill fees, let us know. But we won't be holding our breath.

Thanks for reading.

[bjwhaw]

Education Tech is a good reason too!

Little do people outside of k-12 education tech, knows that these phone taxes also pay for K-12, and libraries to obtain technology related products and services. It is located at www.sl.universalservice.org . School technology could not survive with out this grant program (disclosure: I am paid through this grant from a school district I have a contract through). It also pays for telecom services for schools and libraries. It really is more than a slush fund.

[pdxmhatter]

$350,000 for 1000?

How is it that people can actually even make an argument that the Federal government should be paying hundreds of thousands of dollars to a private company so that they can provide their profitable service to just a few hundred or thousands people? Why not just buy everyone of those rural residents a satellite phone and subsidize their use of that? It'd be cheaper.

The real issue is not the cost of the towers or the "need" of those rural people to get "critical" service. The fact of the matter is, there are many services not available to rural areas simply because they are not economically practical.

Why should the majority of taxpayers foot the bill so that people can live in rural areas and "enjoy" cellular phone service? That is what we're talking about here. Cell service. Not ER medicine or national guard helicopters or anything equally critical. YES, people can indeed make it through the day without cell phones. Hard as it may seem to some.

[fgoldstein]

Waaay out of control

The overall "high cost support" system is way out of control. It allows rural telephone companies to operate on a cost-plus basis with virtually no controls on their costs. For example, Sandwich Isles Communications in Hawaii receives $765/month PER SUBSCRIBER. This lets them pull fiber optics to remote rural homes, who pay low prices for service. Likewise, USF is spending over $10k/home to subsidize the build of "fiber to the ranch" in the countryside surrounding Zapata, TX. They already have region-wide WiFi but that's not subsidized, so the telco is spending more.

Wireless companies can provide service at a far lower cost, and it's probably quite adequate, but the subsidies are now set at the wireline carrier's costs. The proposed answer is to cut off the wireless companies, not let them "bid" for the support (who can provide service the cheapest?). It's a total ripoff. Of course it's not called a "tax", but it's a federally-mandated charge on the bill that goes to the government for redistribution, so it sure looks like one. (Contrast to the "FCC line charge" which is simply part of the rate paid to, and kept by, the phone company.)

[Stating]

Government Programs = Fraud and Waste

Why should anyone be surprised that the USF program is plagued by fraud and waste, you could look at any gooberment program and find the same thing. Think there isn't Medicaid fraud and waste? Look at companies selling medical supplies and devices to the elderly for reimbursement -- $5,000 motorized scooters, $500 wheelchairs, etc. How about farm subsidies. Should Ted Turner, the biggest private landowner in the U.S. get farm subsidies? AgriBusiness? Why are there corn and sugar subsidies? The government spent $41.9 billion on corn subsidies from 1995 to 2004. Government supported ethanol programs are now soaking up huge amounts of corn, driving up corn prices -- so why is there even a corn subsidy anymore? The real issue is that fraudster politicians like Ted Stevens spend their days jawboning to suck ever more money out of taxpayers pockets and zero effort figuring out how to make government run more efficiently.

[disco-legend-zeke]

Wasted Anyway

In one incident, a local provider took federal funds to provide high speed internet to "rural" Arizona, but used the money to overbuild in downtown area which already had DSL and Cable internet.

[chris_d]

Get rid of the phone taxes already

I am sick of all these phone taxes and the "fees" the phone companies charge. You can have a $39.99 phone plan, but it actually costs about $47 once you pay all the extras -- sales taxes, phone taxes, USF, phone company "fees", 911 fees.

[rick laham]

are you kidding???

What about the State Universal funds??? I KNOW there are some real issues that make these Federal tricksters look like Angels. There are State funds that are being pilled up by the millions of dollars of tax payers money through State Universal Funds, that are handed out like candy!
One phone company was getting over three million, of tax payers money out of a State Universal Fund(phone tax)until a Citizens rate payer board attorney questioned the Fund Administrators testimony that would have awarded the small rural phone company the money, and it turned out the Phone company did not have the money coming at all! The fund administrator was able to change her direct testimony and the Phone company ended up with around a hundred thousand instead of over 3 million the fund administrator was attempting to hand out. The same administrator struck a deal with another phone company that received over a million in 2005 and was going to be audited in 2006 but made a "deal" with the same fund administrator to get out of the audit by agreeing not to take ANY money from the fund in the coming year!!! Wow, how could that phone company need a million dollars out of the fund one year, but could get by with zero the next??? And why would the "head auditor" of the fund cut such a "deal"??? Does it look a little shady...?
How about the 8.9 million that the DOJ linked back to the New York crime family that was lifted out of the fund through a small Midwest phone company? Yes some changes do need to be made to the Federal fund, BUT, what about the State funds?